Whoa! What Just Happened to My Stock?

Resist the urge to high-five everyone in the cubicles next to you. Your stock may have just strapped on a rocket pack and taken off for the moon, but smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners, and see whether they're truly headed into orbit.

The bulls are back and continue to run higher on the big earnings reports companies are turning in. Stocks jumped another 95 points yesterday, or almost 1%. So stocks that went significantly higher are pretty big deals.

New frontiers in investing
We already knew local search was the new "new thing." From Local.com to Groupon, ValueClick (Nasdaq: VCLK) to Living Social, connecting people to local business is becoming big business. Facebook, with a massive critical mass, might even become the death of Groupon before it ever finds its legs.

Yet a player with even more mass than Facebook is looking to flex its muscles and it chose ReachLocal as the venue it wants to use. Google (Nasdaq: GOOG) will partner ReachLocal with its AdWords platform in a bid to expand the field of influence its search results yield. It was news of the partnership that sent ReachLocal's shares soaring, which undoubtedly helped it raise its full year guidance.

The business search system is still flying below the radar of Wall Street, but the CAPS community is betting it will find the growth it's looking for as 97% of those rating it seeing it beating the broad market averages. Add the dealmaker to your watchlist then let us know on the ReachLocal CAPS page whether all this local search excitement is just another bubble.

Not an uncommon occurrence 
Silicon Image, a chipmaker focused on the storage, distribution, and presentation of high-definition content in consumer electronics, personal computing, and mobile devices, handily beat Wall Street expectations -- and one analyst in particular more so than the others -- thumbing its nose at concerns over valuation.

Now at 85 times earnings, there is something to be said for wondering whether it can ever grow into that valuation. Yet P/E can be a faulty indicator when a company has minimal profits and this quarter Silicon Image narrowed its losses. What we do have is a company with a ubiquitous technology (HDMI accessories) that are almost de rigeur for watching any high-quality, high-definition picture.

Anders Bylund and probably most analysts were surprised at the lack of an HDMI port in Apple's (Nasdaq: AAPL) new iPad 2, but with support for add-ons Silicon Image should obliquely benefit from the device's popularity. In general, it saw its mobile device segment register 50% growth this quarter while accounting for 17% of product revenues. As profitability returns, Silicon Image's valuation will better reflect the value the stock retains.

There's enough competition to go around, as CAPS member MoneyJungle1 notes, but the demand for hi-def is what will set the chipmaker apart: "Well positioned to capitalize on HD trends. Low debt. Good cash flow. Risky, lots of competition but current momentum is in the right direction."

Get a better picture of its prospects on the Silicon Image CAPS page and keep an eye on its progress by adding the stock to your watchlist.

Making a connection
If $1,500 an ounce gold is just the beginning, where are we likely to see silver end up? Because it straddles both the precious metals and industrial uses markets, silver may be a long, long way from its top. The economy's weak legs are strengthening, albeit slowly and in fits and starts, but it's a sign of what's to come for junior silver miners like Alexco Resource (NYSE: AXU) and Endeavor Silver.

Earlier this month Endeavor said it set new record production levels for gold and silver in the first quarter and revenues nearly doubled, thanks to higher production and higher prices. Since it expects production levels for the entire year to be flat, gains are going to come from high prices then. A better economy should translate into a better Endeavor stock.

CAPS member mitleg says silver's only just getting its own legs for the race higher.

I think the bull market for silver, along with gold continues. It had a pull back, and now it is time for another leg up. The spreading unrest in the middle east will help (Tunisia, Egypt, Libya ....?)

But you can stay on top of the company's developments by adding the stock to the Fool's free portfolio tracker.

Going into orbit
That's why it pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for reentry, or off to infinity and beyond.